First Data First Quarter Financial Results. May 4, 2015

Transcription

1 First Data 2015 First Quarter Financial Results May 4, First First Data Data Corporation. Corporation. All Rights All Reserved. Rights Reserved. 1

2 Safe Harbor Statements in this presentation regarding First Data Corporation s business which are not historical facts are forward-looking statements. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. Please refer to the company s meaningful cautionary statements contained in the appendix of this presentation for a more detailed list of risks and uncertainties. Reconciliation to Non-GAAP measures are provided in the Appendix of this presentation or as part of our Financial Results Press Release accompanying this presentation which can be found at First Data Corporation. All Rights Reserved. 2

3 Key Highlights 4Continued constant currency revenue growth 4Investing in new product solutions and distribution 4Collaborating and forging innovative partnerships 4Further strengthening our global management team 4Implementing strategic expense management initiative $200 million in annualized savings by mid-2016 Anticipated restructuring costs of $75 million, mainly cash 2015 First Data Corporation. All Rights Reserved. 3

4 1Q15 Consolidated Operating Results 4Consolidated revenue of $2.7 billion, up 2% versus the prior year period 4Adjusted revenue of $1.7 billion, up 2% (up 5% constant currency) 4Adjusted EBITDA of $563 million, down 8% (down 6% constant currency) Margin of 34%, down 3 ppts (1) Prior year EBITDA benefited from $17 million in expense credits 4Net loss attributable to First Data of $112 million, improvement of $89 million 4Adjusted net income of $40 million, improvement of $49 million Adjusted Revenue Adjusted Revenue Growth Adjusted EBITDA and Margin % $1,641 $1,765 $1,760 $1,822 $1,678 Reported Revenue Constant Currency 6% 5% $614 $681 $656 $712 $563 4% 4% 4% 2% 3% 3% 3% 2% 37% 39% 37% 39% 34% 1Q14 2Q14 3Q14 4Q14 1Q15 Note: See Appendix on pages (1) ppt = percentage point. 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q First Data Corporation. All Rights Reserved. 4

5 1Q15 Merchant Solutions Results 4Revenue of $888 million, up 4% versus the prior year period EFS sale adversely impacted revenue growth by 1 ppt or $13 million 4Merchant acquiring revenue up 6%, product revenue down 3% EFS sale adversely impacted product revenue growth by 6 ppts Growth in equipment revenue offset by continued decline in check volume 4EBITDA of $368 million, roughly flat EFS sale adversely impacted EBITDA growth by $6 million Segment Revenue Segment Revenue Growth Segment EBITDA and Margin % $856 $945 $920 $947 $888 2% 4% $370 $456 $413 $426 $368 1% 48% 0% 43% 45% 45% 41% (1)% 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q First Data Corporation. All Rights Reserved. 5

6 1Q15 Financial Services Results 4Revenue of $372 million, up 7% versus the prior year period Continued benefit of new business wins, growth in existing portfolios and network revenue 4EBITDA of $180 million, up 4% Margin of 48%, down 2 ppts Expenses increased $16 million primarily due to investments Segment Revenue Segment Revenue Growth Segment EBITDA and Margin % $349 $357 $372 $383 $372 8% $173 $183 $185 $201 $180 7% 7% 50% 51% 50% 52% 48% 6% 5% 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q First Data Corporation. All Rights Reserved. 6

7 1Q15 International Results 4Revenue of $398 million, down 5% versus the prior year period (up 7% constant currency) Merchant acquiring revenue up 11% on volume (constant currency) Issuing revenue grew 3% (constant currency) 4EBITDA of $97 million, down 24% (down 16% constant currency) Margin of 24%, down 6 ppts Prior year EBITDA benefited from $17 million in expense credits Segment Revenue Segment Revenue Growth Segment EBITDA and Margin % $421 $448 $450 $473 $398 Reported Revenue Constant Currency 13% $128 $123 $127 $154 3% 7% 5% 6% 6% 4% 4% 7% 30% 27% 28% 33% $97 24% (5)% 1Q14 2Q14 3Q14 4Q14 1Q15 Note: See Appendix on pages Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q First Data Corporation. All Rights Reserved. 7

8 1Q15 Cash Flow Ended March 31, 2015 with $687 million in unrestricted liquidity (1) and $381 million in revolver borrowings Borrowings Net (3) Adjusted EBITDA $317 -$561 -$154 -$13 Q $358 $563 Working Capital/Other Attributable to Non-Controlling Interests (2) Cash Interest Payments (4) -$145 $340 $265 CapEx -$25 Other $246 Remaining Cash Int'l $ 98 BAMS $ 139 IPS $ 9 $93 Cash Available for Corporate Use $94 Cash 12/31/2014 Cash 3/31/2015 (1) Unrestricted liquidity = $593 million revolver available (after giving effect to outstanding revolver and letters of credit) + $94 million cash available for corporate use; (2) Represents distributions to minority holders in excess of net income attributable to non-controlling interests; (3) Includes short and long term borrowings, net; (4) Represents cash interest paid on short-term and long-term debt service obligations First Data Corporation. All Rights Reserved. 8

9 Capital Structure 4 No significant debt maturities until Ample liquidity: $593 million available under revolving credit facility (1), plus $94 million in cash available for corporate use 4 Significant headroom in our only financial covenant (4.0x versus covenant of 6.0x) Debt Maturity Profile (2) $8,818 $5,942 $10 $0 $1,458 $1,595 $1,908 $1, (1) As of March 31, 2015, $1.0 billion capacity reduced by $42 million reserved for letters of credit and $381 million borrowed on the revolver; (2) Excludes short-term borrowings related primarily to revolving credit facility, outstanding settlement lines of credit and capital leases, excludes unamortized discount First Data Corporation. All Rights Reserved. 9

10 Q & A 2015 First Data Corporation. All Rights Reserved. 10

11 Appendix 2015 First Data Corporation. All Rights Reserved. 11

12 Capital Structure Tranche Rate Call Date Maturity Par Amount 03/31/15 Revolver ($1,016 million) L $381 Capital Leases Short and Long Various Various $194 Term Loan L $1,458 (1) Term Loan L $4,934 (1) Term Loan L $1,008 Term Loan L $1,169 First Lien Notes 7.375% 6/15/ $1,595 (2) First Lien Notes 8.875% 8/15/ $510 First Lien Notes 6.750% 11/1/ $1,398 Senior Secured 5.13% $12,647 (3) Second Lien Notes 8.250% 1/15/ $2,000 Second Lien Notes 8.750% 1/15/ $1,000 Second Lien 8.42% $3,000 Senior Unsecured Notes % 4/15/ $530 Senior Unsecured Notes % 1/15/ $510 Senior Unsecured Notes % 1/15/ $3,000 Senior Unsecured 12.19% $4,040 Subordinated % 5/15/ $1,609 Subordinated 11.75% $1,609 Other 3.57% $40 (4) Total Debt 7.43% $21,335 Cash $340 Net Debt $20,995 (1) $5 billion step up swaps (9/24/12-9/24/16) fixed at average 1.32%; (2) $750 million swapped to floating receiving 3.11% and paying LIBOR flat, mandatory termination on swap; (3) Excludes unamortized discount; (4) Other includes short-term borrowings related to settlement lines of credit First Data Corporation. All Rights Reserved. 12

13 Consolidated Non-GAAP Reconciliation March 31, June 30, September 30, December 31, Change Change Change Change Consolidated Adjusted Revenue Adjusted revenue $ 1,641 $ 1,613 2% $ 1,765 $ 1,702 4% $ 1,760 $ 1,708 3% $ 1,822 $ 1,753 4% Adjustments for non-wholly-owned entities Official check and money order revenues ISO commission expense Reimbursable debit network fees, postage and other Consolidated revenues $ 2,640 $ 2,591 2% $ 2,837 $ 2,709 5% $ 2,792 $ 2,712 3% $ 2,883 $ 2,797 3% Consolidated Adjusted Revenue March 31, Change Adjusted revenue $ 1,678 $ 1,641 2% Adjustments for non-wholly-owned entities 20 1 Official check and money order revenues 1 ISO commission expense Reimbursable debit network fees, postage and other Consolidated revenues $ 2,695 $ 2,640 2% 2015 First Data Corporation. All Rights Reserved. 13

14 Consolidated Non-GAAP Reconciliation March 31, Change Adjusted Expenses $ 1,115 $ 1,027 9% ISO Commission expense Reimbursable debit network fees, postage and other Depreciation and amortization Adjustments for non-wholly-owned entities Restructuring, net 12 8 Impairments 7 Litigation and customer disputes 21 Stock based compensation 7 29 Cost of alliance conversions 3 7 KKR Related items 6 6 Debt issuance costs 1 3 Consolidated expenses $ 2,435 $ 2,355 3% 2015 First Data Corporation. All Rights Reserved. 14

15 Consolidated Non-GAAP Reconciliation Three Months Ended Consolidated Adjusted EBITDA March 31, 2014 June 30, 2014 September 30, 2014 December 31, 2014 March 31, 2015 Adjusted EBITDA $ 614 $ 681 $ 656 $ 712 $ 563 Adjustments for non-wholly owned entities Depreciation and amortization (265) (263) (268) (260) (251) Interest expense (467) (463) (418) (405) (407) Interest income Loss on debt extinguishment (260) Other items (7) (1) (5) Income tax (expense) benefit (37) (40) 23 (28) (3) Stock based compensation (29) (5) (11) (5) (7) Official check and money order EBITDA 1 Costs of alliance conversions (7) (6) (4) (3) (3) KKR related items (6) (8) (6) (7) (6) Debt issuance costs (3) (1) Net income (loss) attributable to First Data Corporation $ (201) $ (34) $ (235) $ 12 $ (112) 2015 First Data Corporation. All Rights Reserved. 15

16 Consolidated Non-GAAP Reconciliation March 31, Change Adjusted Net income (loss) $ 40 $ (9) NM Adjustments to reconcile to Net loss attributable to First Data Corporation: Stock based compensation (7) (29) -76% Amortization of acquisition intangibles (153) (169) -9% Mark-to-Market of Derivatives (2) 3 NM Mark-to-Market of Euro denominated Debt 68 1 NM Restructurings, litigation, impairments and other (58) 2 NM Net loss attributable to First Data Corporation $ (112) $ (201) -44% 2015 First Data Corporation. All Rights Reserved. 16

17 Consolidated Non-GAAP Reconciliation Consolidated Revenue (Constant Currency) Three Months Ended March 31, Change Consolidated Revenue $ 2,695 $ 2,640 2% Foreign exchange impact (1) 52 Consolidated Revenue on a constant currency basis $ 2,747 $ 2,640 4% (1) Foreign exchange impact represents the difference between actual 2015 revenue and 2015 revenue calculated using 2014 exchange rates First Data Corporation. All Rights Reserved. 17

18 Consolidated Non-GAAP Reconciliation Adjusted Revenue (Constant Currency) March 31, June 30, September 30, December 31, Change Change Change Change Adjusted Revenue $ 1,641 $ 1,613 2% $ 1,765 $ 1,702 4% $ 1,760 $ 1,708 3% $ 1,822 $ 1,753 4% Foreign exchange impact (1) Adjusted Revenue on a constant currency basis $ 1,658 $ 1,613 3% $ 1,769 $ 1,702 4% $ 1,766 $ 1,708 3% $ 1,862 $ 1,753 6% March 31, Change Adjusted Revenue $ 1,678 $ 1,641 2% Foreign exchange impact (2) 52 Adjusted Revenue on a constant currency basis $ 1,730 $ 1,641 5% (1) Foreign exchange impact represents the difference between actual 2014 adjusted revenue and 2014 adjusted revenue calculated using 2013 exchange rates. (2) Foreign exchange impact represents the difference between actual 2015 adjusted revenue and 2015 adjusted revenue calculated using 2014 exchange rates First Data Corporation. All Rights Reserved. 18

19 Consolidated Non-GAAP Reconciliation Adjusted Expense (Constant Currency) Three Months Ended March 31, Change Adjusted Expense $ 1,115 $ 1,027 9% Foreign exchange impact (1) 41 Adjusted Expense on a constant currency basis $ 1,156 $ 1,027 12% Adjusted EBITDA (Constant Currency) Three Months Ended March 31, Change Adjusted EBITDA $ 563 $ 614-8% Foreign exchange impact (1) 11 Adjusted EBITDA on a constant currency basis $ 574 $ 614-6% (1) Foreign exchange impact represents the difference between actual 2015 adjusted expense/adjusted EBITDA and 2015 adjusted expense/adjusted EBITDA calculated using 2014 exchange rates First Data Corporation. All Rights Reserved. 19

20 International Non-GAAP Reconciliation International Segment Revenue (Constant Currency) March 31, June 30, September 30, December 31, Change Change Change Change Segment Revenue $ 421 $ 409 3% $ 448 $ 425 5% $ 450 $ 432 4% $ 473 $ 454 4% Foreign exchange impact (1) Segment Revenue on a constant currency basis $ 438 $ 409 7% $ 452 $ 425 6% $ 456 $ 432 6% $ 513 $ % March 31, Change Segment Revenue $ 398 $ 421-5% Foreign exchange impact (2) 52 Segment Revenue on a constant currency basis $ 450 $ 421 7% (1) Foreign exchange impact represents the difference between actual 2014 segment revenue and 2014 segment revenue calculated using 2013 exchange rates. (2) Foreign exchange impact represents the difference between actual 2015 segment revenue and 2015 segment revenue calculated using 2014 exchange rates First Data Corporation. All Rights Reserved. 20

21 International Non-GAAP Reconciliation International Segment EBITDA (Constant Currency) Three Months Ended March 31, Change Segment EBITDA $ 97 $ % Foreign exchange impact (1) 11 Segment EBITDA on a constant currency basis $ 108 $ % (1) Foreign exchange impact represents the difference between actual 2015 segment EBITDA and 2015 segment EBITDA calculated using 2014 exchange rates First Data Corporation. All Rights Reserved. 21

22 International Non-GAAP Reconciliation Three Months Ended March 31, International Segment Revenue By Line of Business (Constant Currency) Change International Segment Revenue - merchant acquiring $ 203 $ 208-2% Foreign exchange impact (1) 27 International Segment Revenue - merchant acquiring on a constant currency basis $ 230 $ % International Segment Revenue - card issuing $ 195 $ 213-8% Foreign exchange impact (1) 25 International Segment Revenue - card issuing on a constant currency basis $ 220 $ 213 3% (1) Foreign exchange impact represents the difference between actual 2015 segment revenue and 2015 segment revenue calculated using 2014 exchange rates First Data Corporation. All Rights Reserved. 22

23 International Non-GAAP Reconciliation Three Months Ended March 31, International Segment Revenue (Constant Currency By Region) Change EMEA revenue $ 235 $ % Foreign exchange impact (1) 38 EMEA revenue on a constant currency basis $ 273 $ 261 5% APAC revenue $ 80 $ 81-1% Foreign exchange impact (1) 6 APAC revenue on a constant currency basis $ 86 $ 81 6% LAC revenue $ 83 $ 79 5% Foreign exchange impact (1) 8 LAC revenue on a constant currency basis $ 91 $ 79 16% (1) Foreign exchange impact represents the difference between actual 2015 segment revenue and 2015 segment revenue calculated using 2014 exchange rates First Data Corporation. All Rights Reserved. 23

24 Notice to Investors, Prospective Investors and the Investment Community; Cautionary Information Regarding Forward-Looking Statements Certain matters we discuss in this presentation and in other public statements may constitute forward-looking statements. You can identify forward-looking statements because they contain words such as believes, expects, may, will, should, seeks, intends, plans, estimates, or anticipates or similar expressions which concern our strategy, plans, projections or intentions. Examples of forward-looking statements include, but are not limited to, all statements we make relating to revenue, EBITDA, earnings, margins, growth rates and other financial results for future periods. By their nature, forward-looking statements: speak only as of the date they are made; are not statements of historical fact or guarantees of future performance; and are subject to risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Actual results could differ materially and adversely from our forward-looking statements due to a variety of factors, including the following: (1) our ability to implement and improve processing systems to provide new products, improve functionality and increase efficiencies; (2) our ability to prevent a material breach of security of any of our systems; (3) our ability to anticipate and respond to technological changes, particularly with respect to e-commerce and mobile commerce; (4) our high degree of leverage; (5) credit and fraud risks in our business units and the merchant alliances, particularly in the context of e-commerce and mobile markets; (6) our merchant alliance program which involves several alliances not under our sole control and each of which acts independently of the others; (7) the impact of new laws, regulations, credit card association rules or other industry standards; (8) adverse impacts from currency exchange rates or currency controls imposed by any government or otherwise; (9) our ability to successfully convert accounts under service contracts with major clients; (10) changes in the interest rate environment that increases interest on our borrowings; (11) consolidation among client financial institutions or other client groups that impacts our client relationships; (12) catastrophic events that impact our or our major customers operating facilities, communication systems and technology; (13) new lawsuits, investigations or proceedings, or changes to our potential exposure in connection with pending lawsuits, investigations or proceedings, and various other risks that are set forth in our Annual Report on Form 10-K for the period ended December 31, 2014, including but not limited to, Item 1 - Business, Item 1A - Risk Factors and Item 7 - Management Discussion and Analysis of Financial Condition and Results of Operations First Data Corporation. All Rights Reserved. 24